Coinbase, Major Investment Firm Team up to Launch $500 Million Crypto Fund

Coinbase and Wilshire Phoenix have recently teamed up to launch a fund capped at $500 million.

The fund is set to use a "novel approach" to help clients gain exposure in the crypto ecosystem.

Coinbase Custody, a unit of San Francisco-based cryptocurrency exchange Coinbase, has recently teamed up with New York-based investment firm Wilshire Phoenix to launch a cryptocurrency fund capped at $500 million.

According to a recently published press release, Wilshire Phoenix expects the fund to be launched later this year, to provide its clients exposure to bitcoin through a “novel approach” that’s reportedly set to mitigate “some of the risks” associated with the flagship cryptocurrency’s volatility.

Per the release, the investment fund “may” make it easier for financial institutions and investors to gain exposure to the cryptocurrency ecosystem. It won’t, however, “simply hold bitcoin.”

Per the document, investors and financial institutions may find it hard to buy and hold cryptocurrencies as under America’s Generally Accepted Accounting Principles (GAAP), their pricing models imply specific challenges. The investment firm believes its patent-pending system will provide a solution.

To limit counterparty exposure and “unnecessary additional fees” normally associated with investment funds, the firm will also not use derivatives or “any form of leverage” to help clients gain exposure to bitcoin, the press release states.

Bill Hermann, the founder and CEO of Wilshire Phoenix, stated that Coinbase Custody provides the firm a best in class platform on which to securely store digital assets.” The document adds:

While the fund is not intended to replicate a direct investment in Bitcoin. It will seek to provide investors and financial institutions with the ability to gain exposure to Bitcoin while mitigating some of the risks involved from sudden price movements of Bitcoin.

Sam McIngvale, general manager of Coinbase Custody Trust, added the San Francisco-based company is not only offering Wilshire Phoenix clients’ secure storage for their cryptocurrencies, but also the “ability to perform GAAP-compliant audits whenever the need arises.”